78 CONGRESSIONAL RECORD-HOUSE MARCH 9

under section 206 after the d ate of such newspaper publication When such circulating notes are issued against the security of
and before the time when the affairs of the bank are returned obligations of the United States the amount of such circulating
to its directors. notes shall be equal to the face value of the direct obligations of
SEc. 209. Conservators appointed pursuant to the provisions of the United States so deposited as security; and, when issued
this title shall be subject to t he provisions of and to the penalties against the security of notes, drafts, bills of exchange, and bankers'
prescribed by section 5209 of the Revised Statutes (U. S. C., title acceptances acquired under the provisions of this act, the amount
12, sec. 592), and sect ions 112, 113, 114, 115, 116, and 117 of the thereof shall be equal to not more than 90 percent of the esti-
Criminal Code of the United States (U. S. C., title 18, sees. 202, mated value of such notes, drafts, bills of exchange, and bankers'
203, 204, 205, 206, and 207, in so far as applicable, are extended to acceptances so deposited as security. Such notes shall be the obli-
apply to contracts, agreements, proceedings, dealings, claims, and gations of the Federal Reserve bank procuring the same, shall be
cor.troversies by or with any such conservator or the Comptroller in form prescribed by the Secretary of the Treasury, shall be re-
of the Currency under the provisions of this title. ceivable at par in all parts of the United States for the same
SE::::. 210. Nothing in this title shall be construed to impair in purposes as are national-bank notes, and shall be redeemable in
any manner any powers of the President, the Secretary of the lawful money of the United States on presentation at the United
Treasury, the Comptroller of the Currency, or the Federal Reserve States Treasury or at the bank of issue. The Secretary of the
Board. Treasury is authorized and empowered to prescribe regulations
SEc. 211. The Comptroller of the Currency is hereby authorized governing the issuance, redemption, replacement, retirement, and
and empowered, with the approval of the Secretary of the Treas- destruction of such circulating notes and the release and substi-
ury, to prescribe such rules and regulations as he may deem tution of security therefor. Such circulating notes shall be sub-
necessary in order to carry out the provisions of this title. Who- ject to the same tax as is provided by law for the circulating
ever violates any rule or regulation made pursuant to this section notes of national banks secured by 2 percent bonds of the United
shall be deemed guilty of a misdemeanor and, upon conviction States. No such circulating notes shall be issued under this para-
thereof, shall be fined not more than $5,000, or imprisoned not graph after the President has declared by proclamation that the
more than one year, or both. emergency recognized by the President by proclamation of March
6, 1933, has terminated, unless such. circulating notes are secured
TITLE m by deposits of bonds of the United States bearing the circulation
SEc. 301. Notwithstanding any other provision of law, any na- privilege. When required to do so by the Secretary of the Treas-
tional banking association may, with the approval of the Comp- ury, each Federal Reserve agent shall act as agent of the Treas-
troller of the Currency and by vote of shareholders owning a urer of the United States or of the Comptroller of the Currency,
majority of the stock of such association, upon not less than five or both, for the performance of any of the functions which the
days' notice, given by registered mail pursuant to action taken by Treasurer or the Comptroller may be called upon to perform in
its board of directors, issue preferred stock in such amount and. carrying out the provisions of this paragraph. Appropriations
with such par value as shall be · approved by said comptroller, and available for distinctive paper and printing United States currency
make such amendments to its articles of association as may be or national-bank currency are hereby made available for the .pro-
necessary for this purpose; but, in the case of any newly organ- duction of the circulating notes of Federal Reserve banks herein
ized national banking association which has not yet issued com- provided; but the United States shall be reimbursed by the Federal
mon stock, the requirement of notice to and vote of shareholders Reserve bank to which such notes are issued for all expenses neces-
shall not apply. No issue of preferred stock shall be valid until sarily incurred in connection with the procuring of such notes and
the par value of all stock so issued shall be paid in. all other expenses incidental to their issue, redemption, replace-
SEc. 302. (a) The holders of such preferred stock shall be ment, retirement, and destruction."
entitled to cumulative dividends at a rate not exceeding 6 per cent SEc. 402. Section 10 (b) of the Federal Reserve Act, as amended,
per annum, but shall not be held individually responsible as such is further amended to read as follows:
holders for any debts, contracts, or engagements of such associa- " SEc. 10. (b) In exceptional and exigent circumstances, and
tion, and shall not be liable for assessments to restore impair- when any member bank has no further eligible and acceptable
ments in the capital of such association as now provided by law assets available to enable it to obtain adequate credit accommo-
with reference to holders of common stock. Notwithstanding any dations through rediscounting at the Federal Reserve bank or any
other provision of law, the holders of such preferred stock shall other method provided by this act other than that provided by
have such voting 1·ights, and such stock shall be subject to retire- section 10 (a}, any Federal Reserve bank, under rules and reglua-
ment in such manner and on such terms and conditions as may tions prescribed by the Federal Reserve Board may make advances
be provided in the articles of association with the approval of the to such member bank on its time or demand notes secured to the
Comptroller of the Currency. satisfaction of such Federal Reserve bank. Eacll such note shall
(b) No dividends shall be declared or paid on common stock bear interest at a rate not less than 1 per cent per annum higher
until the cumulative dividends on the preferred stock shall have than the highest discount rate in effect at such Federal Reserve
been paid in full; and, 1f the association is placed in voluntary bank on the date of such note. No advance shall be made under
liquidation or a conservat or or a receiver is appointed therefor, no this section after March 3, 1934, or after the expiration of such
payments shall be made to the holders of the common stock until additional period not exceeding one year as the President may
the holders of the preferred stock shall have been paid in full the prescribe."
par value of such stock plus all accumulated dividends. SEc. 403. Section 13 of the Federal Reserve Act, as amended, is
SEc. 303. The term "common stock" as used in this title means amended by adding at the end thereof the following new
st ock of national banking associations other than preferred stock paragraph:
issued under the provisions of this title. The term "capital" as "Subject to such limitations, restrictions, and regulations as
used in provisions of law relating to the capital of national bank- the Federal Reserve Board may prescribe, any Federal Reserve
ing associations shall mean the amount of unimpaired common bank may make advances to any individual, partnership, or corpo-
stock plus the amount of preferred stock outstanding and unim- ration on the promissory notes of such individual, partnership, or
paired; and the term "capital stock," as used in section 12 of the corporation secured by direct obligations of the United States.
act of March 14, 1900, shall mean only the amount of common Such advances shall be made for periods not exceeding 90 days
stock outstanding. and shall bear interest at rates fixed from time to time by the
SEC. 304. If in the opinion of the Secretary of the Treasury any Federal Reserve bank, subject to the review and determination
national banking association or any State bank or trust company of the Federal Reserve Board."
is in need of funds for capital purposes either in connection with TITLE V
the organization or reorganization of such association, State bank SEc. 501. There is hereby appropriated, out of any money in the
or trust company or otherwise, he may, with the approval of the Treasury not otherwise appropriated, the sum of $2,000,000, which
President, request the Reconstruction Finance Corporation to sub- shall be available for expenditure, under the direction of the Presi-
scribe for preferred stock in such association, State bank, or trust dent and in his discretion, for any purpose in connection with
company, or to make loans secured by such stock as collateral, and the carrying out of this act.
the Reconstruction Finance Corporation may comply with such SEc. 502. The right to alter, amend, or repeal this act is hereby
request. The Reconstruction Finance Corporation may, with the expressly reserved. If any provision of this act, or the application
approval of the Secretary of the Treasury, and under such rules thereof to any person or circumstances, is held invalid, the re-
and regulations as he may prescribe, sell in the open market or mainder of the act, and the application of such provision to
otherwise the whole or any part of the preferred stock of any other persons or circumstances, shall not be affected thereby.
national banking association, State bank, or trust company ac-
quired by the corporation pursuant to this section. The amount Mr. STEAGALL. Mr. Speaker, in view of the supreme
of notes, bonds, debentures, and other such obligations which the emergency confronting the Congress and the country, it
Reconstruction Finance Corporation is authorized and empowered
to issue and to have outstanding at any one time under existing was thought that the House should act upon the legislation
law is hereby increased by an amount sufficient to carry out the before us without the delay incident to the organization of
provisions of this section. the Committee on Banking and Currency to which the legis-
TITLE rf/
lation would be referred for consideration under the usual
SEc. 401. The sixth paragraph of section 18 of the Federal procedure of the House.
Reserve Act is amended to read as follows:
"Upon the deposit with the Treasurer of the United States (a) Members of the House, including the distinguished leadzr
of any direct obligations of the United States or (b) of any notes, and the beloved Speaker of the House, and Members of the
drafts, bills of exchange, or bankers' acceptances acquired under Senate were called into conference last evening by the Chief
the provisions of this act, any Federal Reserve bank making such Executive of the Nation and this bill was discussed by him
deposit in the manner p rescribed by the Secretary of the Treasury
shall be entitled to receive from the Comptroller of the Currency and the request made that the measure be expedited in every
circulating notes in blank, duly registered and countersigned. possible manner. In response to this request and in rc-
1933 CONGRESSIONAL RECORD-HOUSE 79
sponse to the demands of the hour, we have adopted this In the case of the deposit of notes, drafts, bills of ex-
unusual method of consideration. change, and bankers' acceptances, Federal Reserve banks
The first provision of the bill validates and maintains the may issue Federal Reserve bank notes to the amount of
authority exercised by the President of the United States 90 per cent of the value of such securities.
in the proclamation relating to the banks of the Nation This provision affords a plan for constructive expansion
issued by the President on March 6, 1933. of the currency of the country. [Applause.]
Section 2 confers upon the President the powers bestowed Mr. McREYNOLDS. To what amount?
under the act of October 6, 1917, regardless of whether or Mr. STEAGALL. The amount will be limited by the de-
not the country is involved in war. mands and the exigency of the situation, and, of course, by
Section 3 gives authority to regulate transactions in gold the requirements of applying banks. [Applause.]
and to exercise such powers as are required from time to I will say to my friend on my right that there cannot
time to conserve our supply of gold to prevent boarding be a greater expansion than the banks of the country de-
and to protect the currency of the United States. mand for the protection of their depositors and for the
Section 4 confers specific authority to control the bank- support of trade and commerce in the United States. These
ing operations of national banks and State banks that are depend on bank deposits and bank credit.
members of the Federal Reserve System to the end that the Mr. MAY. Will the gentleman yield?
public may have restored to them, at the earliest possible Mr. STEAGALL. I will yield.
hour, such banking facilities as may be afforded by banks Mr. MAY. I understand that banks owning United States
that are in position to transact banking activities without bonds can send them to the Federal Reserve bank and have
restriction. 90 per cent of cash returned.
The Comptroller of the Currency, with the approval of Mr. STEAGALL. An individual or any State bank may
the Secretary of the Treasury, is given authority to ap- do it and to the amount of the face value of the bonds.
point conservators to manage the affairs of national and That is where we have gone in liberalizing credit and ex-
member banks that are not, for the moment, in condition pansion.
to resume complete operation. The conservator is em- My friends, if-you ask me if this is going to cure the situa-
powered to do all the things essential to the preservation tion in the United States, I do not say that it will cure all
of the assets of an institution, to the protection of deposi- of our ills. If you ask me if this is what I would do in the
tors and the public. But no power is given to proceed with existing emergency, I answer you that it is not all I would
final liquidation of the assets of a bank or to exercise com- do. It is not all that is going to be done. [Applause.]
pletely the powers reposed in receivers of national banks. This is simply one step. We are building upon wreck
State banks are not included in this provision of the bill. and ruin. It has taken 50 years to develop the great finan-
We thought it wise, after consideration of the measure, that cial system of the United States which is now prostrate and
State banks should not be embodied in legislation to the in ruins. We can not rebuild it in a day, we can not rebuild
extent that we have provided for the control of national it in 3 days. We cannot rebuild it tomorrow or next week.
banks and member banks. The bill leaves State banks We can only do it step by step.
to the control of the State banking authorities, to work out Heaven is not reached at a single bound;
their own problems in their own way, aided by some addi- But we build the ladder by which we rise
tional credit facilities established by this legislation and by From the lowly earth to the vaulted skies
further accommodations through the Reconstruction Finance And we mount to its summit round by round.
Corporation. The step we take leads upward toward the light. We
The bill authorizes the Reconstruction Finance Corpora- shall take this step today; we shall take another step to-
tion to subscribe for preferred -stock in banks; and, after morrow and then again another and another.
discussion and deliberation, it was decided-and the bill is The people ba ve summoned to their service a leader
so drawn-that State banks and trust companies shall share whose face is lifted toward the skies. [Applause.] We fol- .
in the benefits of this provision the same as national banks low that leadership today, and we shall follow that leader-
and member banks of the Federal Reserve System. ship until we stand again in the glorious sunlight of pros-
So the Reconstruction Finance Corporation is not only perity and happiness in this Republic. [Applause.]
authorized, as under existing law, to make loans upon the Mr. Speaker, I reserve the balance of my time.
assets of State banks and National banks that are in distress, Mr. McFADDEN. Mr. Speaker, I yield 5 minutes to the
but the facilities of the Reconstruction Finance Corporation gentleman from Massachusetts [1\.fi'. LucEL
for accommodation have been enlarged to include loans Mr. LUCE. It is, of course, out of the question, Mr.
upon the preferred stock which any bank, State or National, Speaker, that any man can grasp the full meaning of that
will be permitted to issue, or to subscribe for preferred bill by listening to its reading, having bad no intimation
stock, and assist State banks as well as national banks, in whatever beforehand of what it contains.
working out the problems with which they are confronted I, too, desire to help the administration meet this crisis.
and to assist in reorganization. Whenever it may be necessary I will waive all opportunities
I venture to say that this provision of the bill will prove of discussion.
of great advantage to the State banks of the country, over Perhaps it was necessary in this instance to keep us on the
which we have no Federal control, and as to which we have minority side who have some acquaintance with this subject
not attempted to set up Federal control and regulation. in the dark until the bill was produced. I will not intimate
We have provided a simpler and broader authority for that there was intentional refraining from consultation with
loans by Federal Reserve banks upon securities and collateral Members of this House who now for many years have lived
not eligible under the general authority of the Federal with these questions and who ought to know something
Reserve Act. This provision is extended for the period of 1 about them. The majority leaders have brought us a bill on
year, with power conferred upon the President to extend the which I myself am unable to advise my colleagues, except
operation for an additional year. to say that this is a case where judgment must be waived,
We have provided that any direct obligations of the United where argument must be silenced, where we should take
States or any notes, drafts, bills of exchange, or bankers' matters without criticism lest we may do harm by delay.
acceptances acquired by Federal Reserve banks may be de- [Applause.]
posited with the Treasurer of the United States or with the Let me illustrate the embarrassments that come from
Federal Reserve agents, and upon these securities Federal lack of information. There is in this bill a provision for
Reserve bank notes may be issued. In case of the deposit of preferred stock of banks. Imagine my own situation, con-
the obligations of the Government, the issue of Federal fronted by the fact that not 4 hours ago I put into the
Reserve bank notes may be for the entire amount of such box there a bill with provision for that very purpose,
securities. not having the slightest idea that there had been discussion
80 CONGRESSIONAL RECORD-HOUSE MARCH 9
of this matter. I do not want to be impatient, I do not want tions, you will be enmeshed in all the things that they have
to seem even in the slightest disturbed, but I do think, and been doing, and they have been doing some things, as I have
I say to my friends of the majority, that if they desire us pointed out heretofore, or we would not be in the condition
to go along in these things, if they desire our sympathetic we are in today. I want to know, so far as I am concerned,
cooperation-we want to give it-let the desired results be that this bill represents the ideas of the new administra-
accomplished by ways that will not arouse in the breast tion-the new deal. I shall help to carry it through if it is
of any man the thought that he has not had a fair show, that. If, on the other hand, this bill has been proposed and
the feeling that he has not had opportunity to present his written by the same influences that are responsible for this
views, the feeling that he has had no chance to pass criti- financial situation, I shall fight it and do everything that I
cism, possibly helpful. can to defeat it. It seems to me there is authority here to
Let us forget what has happened in this instance, let us continue the Federal Reserve operations under the same
not allow it to remain in our minds against anyone. Doubt- management, and it seems to me I can see much in this bill
less the pressure of the situation made quick action im- that can be abused and that may have been dictated by the
perative. I am not going to protest against it. I am going same banking influences that are responsible for our present
to ask my Republican friends to accept my own position predicament. I hope that is not so, but I do want to impress
and not begrudge any help to the President of the United upon this House and upon the administration the impor-
States in this emergency. [Applause.] tance of going to the bottom of this situation. This situa-
There are in this bill some things that if they could have tion demands a house cleaning. Confidence in this country
been discussed by the Banking and Currency Committee will not be restored until the people of the country know the
might have been reshaped, perhaps to the public advantage, condition of the United States Treasury and the condition
but better have it go along as it is, without any attempt of the Federal Reserve banks.
at change, without any repining, without any complaint. It is difficult under the circumstances to discuss this bill.
Let it go now, remembering that this House is to continue The first section of the bill, as I grasped it, is practically the
in session, at least off and on, for some time; and if it war powers that were given back in 1917, with some slight
proves that errors have been made in the hasty drafting of amendments. The other gives supreme authority to the
the bill, we shall have the opportunity, by law, to make Secretary of the Treasury of the United States to impound
corrections-provided the opportunity is given to us, pro- all the gold in the United States in the hands of individuals,
vided this procedure is not repeated except when absolutely corporations, or companies for the purpose, I suppose, of
necessary, provided the Committee on Banking and Currency bringing together that gold and making it available for the
is called together and given more opportunity than it had issuance of Federal Reserve notes.
in the previous session to consider the great problems con- The third section deals with how bank.s are to be handled
fronting the Nation, provided these problems are laid be- under this authority, how bank assets are to be frozen, and
for.e the committee speedily, provided that we there may deals with the question of limited receiverships and receiv-
voice our matured views, express our friendly criticisms, and erships. The last section of the bill provides for the issu-
harmoniously work out together the results that shall be ance of a new money. I am a little at a loss, in the hurried
best for the country. [Applause.] way I have had to read the bill, to understand just how
Mr. McFADDEN. Mr. Speaker, I regret that the mem- this new money is to be handled. I refer to section 401,
bership of the House has had no opportunity to consider or which reads:
even read this bill. The first opportunity I had to know Upon deposit with the Treasurer of the United States of all
what this legislation is was when it was read from the contract obligations of the United States, or any notes--
Clerk's desk. It is an important banking bill. It is a dic-
tatorship over finance in the United States. It is complete And so forth. •
control over the banking system in the United States. It Under the Federal Reserve Act obligations that are depos-
seems to me that the casual reading which I have given to ited as the security and gold for reserve notes are placed in
the bill indicates clearly that if banks are permitted to the hands of the Federal Reserve agent. I would like to ask
open tomorrow morning, only those banks which do open the chairman of the committee if this is a plan to change
will be permitted to operate. Other banks that do not open the holding of the security back of Federal Reserve notes
tomorrow morning will be opened under a limited receiver- to the Treasury of the United States rather than the Fed-
ship or a receivership. It is a protection for the solvent eral Reserve agent.
banks of the United States first. Of course it may be that Mr. STEAGALL. This provision is for the issuance of
the banking system is in such shape that it is necessary to Federal Reserve bank notes; not for Federal Reserve notes;
deal with it in this manner. I have been calling attention and the security back of it is the obligations, notes, drafts,
for some years past to the manner in which the Federal bills of exchange, bank acceptances, outlined in the section
Reserve System has been conducted, and have predicted that to which the gentleman has referred.
it would lead to this kind of a situation. We have, step by Mr. McFADDEN. Then the new circulation is to be Fed-
step, been proceeding along the lines of centralization. At- eral Reserve bank notes and not Federal Reserve notes? Is
tempts in past meetings of this Congress have succeeded in that true?
enacting increasingly centralized banking plans. This gives Mr. STEAGALL. Insofar as the provisions of this sec-
supreme authority to those people who have wanted to tion are concerned, yes.
control the finances of this Government, through a cen- Mr. McFADDEN. I would like to ask the gentleman right
tralized system, to have such a system. I wish, and I hope in that connection, is there any gold reserve to be held as
for the new administration all success. No one wants the security back of these new Federal Reserve bank notes?
new administration, under the leadership of President Mr. STEAGALL. The law provides 5 percent back of
Roosevelt, to succeed any more than I do. I shall go as far Federal Reserve bank notes, just as is maintained in case of
as any other man to see that success comes to it, but I say national-bank notes. There have been issued a small
now to that leadership that the first thing that must be amount of these notes; I cannot recall the exact figures.
done is to audit the United States Treasury. [Applause.] The gentleman is probably more familiar with it than I
We want to know, the people of the United States want to am. There is only a little of that currency outstanding.
know, the condition of the Public Treasury and the obliga- This contemplates a substantial addition to it. It is a liber-
tions that are outstanding. We want to know the amount alization of currency issue, to take care of banks in their
of gold in the United States Treasury, and we want to know efforts to respond to the demands of business and liability
the amount of gold in the Federal Reserve System. We want to their depositors.
to know the total amount of outstanding Government ob- Mr. McFADDEN. The current press reports indicate there
ligations. Tr.Js is a time to drav1 a line, and may I say to will be issued under this authority some $2,000,000 or more
you Democrats here that if you do not draw a line through of new currency, and made available to the banks. Is that
the Treasury operations now and the Federal Reserve opera- correct?
1933 CONGRESSIONAL RECORD-HOUSE 81
Mr. STEAGALL. To be frank with the gentleman, I The SPEAKER. Under the unanimous-consent agreement
should not like to be bound in my answer by estimates out- the previous question is considered as ordered.
lined in newspaper reports. The issue might greatly exceed The bill was ·ordered to -be read a third time, was read
the amount suggested. - the third time, and passed.
Mr. McFADDEN. Will .the gentleman say how much it On motion of Mr. STEAGALL, a motion to reconsider the
is possible to be issued or is contemplated to be issued? vote by which the bill was passed was laid on the table.
Mr. STEAGALL. No one knows. It is not an arbitrary EXTENSION OF REMARKS-H.R. 21
expansion. The purpose is to provi5fe an elastic expansion Mr. BYRNS. Mr. Speaker, I ask unanimous consent that ·
to meet the exigencies and development of banking and busi- all Members have 5 legislative days within which to extend
ness conditions. their own remarks upon this bill.
Mr. McFADDEN. I t.hink it is fairly clear from the collo- The SPEAKER. Is there objection to the request of the
quy that has just taken place that the increased Federal gentleman from Tennessee?
ReEerve circulation is to be in the form of Federal Reserve There was no objection.
bank notes and not the present Federal Reserve notes that CURRENCY EXPANSION-PRESIDENT'S MOVE DRAMATIC AND
are in circulation to the extent of approximately $4,000,000,- INSPIRING
000, which are secured by 60 percent of eligible paper or Mr. RANKIN. Mr. StJeaker, for 3 years I have been
Government bonds and 40 percent of gold. This is a new pleading for a controlled expansion of the currency to raise
issue which is authorized under the Federal Reserve Act, commodity prices and restore the purchasing power of the
which has not to any great extent been resorted to here- American people. Other Members of the House and Senate
tofore. have joined me in the fight, but up to this 'day our efforts
Mr. BRITTEN. Will the gentleman yield for a question? have been in vain.
Mr. McFADDEN. I will. Those influences and individuals most responsible for the
Mr. BRITTEN. From my observation of the bill as it direful conditions through which we are now passing have
was read to the House, it would appear that the amount resisted us at every point. We have been ridiculed and
of bank notes that might be issued by the · Federal Reserve abused by the very money changers whose misconduct pro-
System is not limited. That will depend entirely upon the duced this terrible panic, with all its misery, its poverty, its
amount of collateral that is presented from time to time hunger, its human suffering and human distress. " What-
for exchange for bank notes. Is that not correct? soever man soweth, that shall he also reap." The very ones
Mr. McFADDEN . . Yes. I think that is correct. who sowed the seeds of this panic are now reaping the fruits
Mr. BRITTEN. So that it might run to $20,000,000,000? of their own misconduct as they see their monetary Tower of
Mr. McFADDEN. In the discretion of the President and Babel crash amid a confusion of tongues.
the Secretary of the Treasury. These notes are to be se- We are in the bottom of the pit. Every direction is uphill.
cured by assets that are approved, that are turned over by The gentleman from Illinois [Mr. BRITTEN] intimated a
financial institutions to the Treasury of the United States. while ago that this bill might result in unlimited expansion
[Applause.] or infiation. My answer to that statement is that conditions
Mr. STEAGALL. Mr. Speaker, I yield 3 minutes to the cannot be made worse, from an economic standpoint, than
gentleman from Maryland [Mr. GoLDSBOROUGH]. they are today.
Mr. GOLDSBOROUGH. Mr. Speaker, in time of storm Besides, this bill does not provide for an unlimited expan-
there can only be one pilot. In my judgment, the House sion. It provides for a controlled expansion. Every dollar
of Representatives realize that the pilot in this case must of this new money will be worth 100 cents; and if issued in
be the President of the United States, and they,. will steer a sufficient amount, the result will be an immediate advance
their course by him. [Applause.] in the prices of wheat, cotton, corn, land, and other com-
Mr. Speaker, in my deliberate judgment, under the modities.
leadership of the President of the United States, there will It is the beginning of a new day-a turning point in the
shortly be brought from the Committee on Banking and economic affairs of the American people, if not of the entire
Currency carefully considered legislation insuring the de- world. This bill will be followed by one providing permanent
positors in a~ banks [applause] and carefully considered legislation on this subject; and if we will incorporate in that
legislation which will refiate and stabilize the currency of permanent legislation the provision laid down in the bill
this country. [Applause.] Mr. Speaker, those two meas- which I have been advocating and which I have reintroduced
ures, if enacted into law, will speedily give the people of today-to expand the currency until the general commodity-
this country such prosperity as we have never had before price index as worked out by the United States Department
in all of its history. [Applause on the Democratic side.] of Labor reaches 100, and then providing for a retrenchment
Mr. STEAGALL. Mr. Speaker, I yield the remainder of in case the commodity index rises above 103, and also for
my time to the gentleman from Mississippi EMr. BusnYJ. reexpansion in case the commodity index sinks below 97-
Mr. BUSBY. Mr. Speaker, in order for business to carry if these provisions are written into the permanent legislation,
on, it is necessary to have a medium of exchange. In this this expansion will raise the commodity prices back to what
country our medium of exchange is based on currency and they were in 1926, stabilize them there, and prevent those
on bank credits. For several months some of us have seen violent fluctuations in prices that have always proved dis-
the bank-credit situation breaking down and going out of astrous to the farmers, the home owners, the small investors,
use. The condition in which we find ourselves today is and the masses of our people generally.
absolutely no surprise to me, and it is no surprise to some The American people are looking today. to our new Presi-
of the other gentlemen who have studied the question. The dent to lead us out of the economic chaos in which we find
house had to fall upon us to get some of the gentlemen who ourselves. This is the most dramatic and inspiring move
are responsible for our condition to understand our predica- ever taken by a President of the United States in times of
ment. peace. If it is followed up by permanent legislation that
I have hoped, and others have hoped, for a restoration of will give us a controlled expansion of the currency, and an
the currency and of the mediums of exchange in this coun- assurance of the safety of bank deposits, our country will
try-to no avail. We have come to the point where we are immediately awake, as it were, from its nightmare of agony
willing to endorse in a formal way an Executive fiat on this and leap forward into a glorious era of happiness and
question; and I want to follow on, because I want the people prosperity.
of this country to have currency and mediums of exchange H.R. 21, ABILL TO REDUCE THE GOLD CONTENT OF THE GOLD DOLLAR
with which to do business. [Applause.] Mr. McGUGIN. Mr. Speaker, I have introduced H.R.
Mr. STEAGALL. Mr. Speaker, I move the previous ques- 21. I wish to make a brief statement pertaining to this bill.
tion on the passage of the bill. In doing so I shall use the statement I gave to the press
LXXVII---6
82. CONGRESSIONAL RECORD-HOUSE MARCH 9
when I filed this bill with the bill clerk, Tuesday, March 7, satisfied with a false security and led by a financial leader-
1933. ship steeped in selfishness and blind to shadows casting
There is not any question but that sooner or later the gold present events would have none of it. The Burtness bill,
dollar is going to be revalued with a reduction of the gold passed a year or more ago, would have saved us f1·om much
content. The only question 'involved . is whether we are of our present trouble.
going to reduce the gold content in an orderly way or a dis- The welfare of the Government needs this or some other
orderly way. The orderly way to do it is honestly, fearlessly, similar legislation. In addition to our governmental finan-
.and frankly to reduce the content a given amount. The dis- cial troubles, the debts, private and public, in this country
mderly way is to break loose and start printing currency cannot be paid on the basis of gold dollars of 23.22 grains.
without any regard for the gold reserve. THE BANKING EM.ERGENCY RELIEF ACT
The bill which I am introducing in the House and which,
I understand, Senator CoNNALLY will introduce in the Sen- Mr. SMITH of Washington. Mr. Speaker, ladies and gen-
ate, provides for an outright reduction of one third in the tlemen of the House, I shall vote for this measure, although
gold content of the dollar. This is following the orderly I should like to have had an opportunity to study and con-
course. sider its provisions. It has not been possible to do this
·owing to the fact that the bill has merely been read to us
We now have approximately $4,000,000,000 of gold in the by the Clerk this afternoon on the opening day of this special
Treasury and Federal Reserve, based upon gold dollars of session, without our being furnished copies thereof, and the
23.22 grains of gold each. With this reduction of one third
bill not being subject to amendment and only 40 minutes
in the gold content, we shall have approximately $6,000,- allowed for debate. This is a most extraordinary situation.
000,000 of gold in the Treasury and Federal Reserve. This However, we are advised by President Roosevelt in his
additional $2,000,000,000 in gold will permit an additional message which has just been read that the immediate pas-
issuance of from two to five billion dollars in currency. sage of this legislation is absolutely .necessary in order to
Based upon the established ratio of $1 of currency for 40 reopen the banks in the Nation and provide them with addi-
cents' worth of gold, these additional $2,000,000,000 obtained .t ional and adequate currency. Vve are further informed by
by reducing the gold content one third will permit addi- our distinguished majority leader [Mr. BYRNS] that the Sen-
tional currency in the amount of $5,000,000,000. ate is now awaiting the action of the House on this par-
If we start out printing currency without regard for the
ticular bill, and that in order to reopen the banks of the
gold reserve, then in the end, when we find that excessive country on tomorrow it must be enacted into law today.
inflation destroys the country and the people, we shall try I shall, therefore, vote for the bill, Mr. Speaker, because of
to get back to the gold standard. Then we shall find that
we have so much currency outstanding that we cannot tie in these assurances of our great President and our able leaders
this body.
it to our limited supply of gold except by reducing the con-
tent of the gold dollar in proportion to the increased amount However, if time and opportunity had been afforded to do
of currency. That may mean that we shall have to decrease so, I believe that this legislation should have been amended
the gold content 50 percent, maybe 75 percent, and maybe or rewritten to include the State banks scattered throughout
90 percent. It will all depend upon how far we carry the the land, which in many communities constitute the sole
inflation during the period that our currency is not tied to banking facilities enjoyed by the people.
gold. It may be that we shall do as Germany did by going I hope that the additional currency which may be issued
so far that there is no possibility of tying all of our out- by the national banks under this act will render available
standing currency to gold, and we shall be obliged to repudi- the credit and funds so sorely needed by the business and
ate and cancel some of our currency. industrial interests of our country, in order that there may
Now we are going to have some inflation or more cur- be a resumption of operations and employment for the
rency. It does not make any difference whether every Mem- people. If the new currency is not placed in circulation,
ber of Congress, the President, and everyone in the United this legislation, my colleagues, will fail of its purpose, which
States is opposed to any inflation, we can not stop the in- should be to aid the people rather than the banks.
evitable. The Government has for 3 years been spend- Mr. Speaker, we must have a Federal guaranty of bank
ing more money than it has taken in by taxation. It has deposits law, so that the savings of our citizens and the
been meeting this deficit by borrowing money from the money of our merchants and business men in all the com-
banks. That day is over. The banks are closed. Now the munities of our land will be safe and secure. Not until such
problem is, How is the Government going to get the banks a Federal statute is passed and in force will complete confi-
open and keep them open, and not how are the banks going dence in our banking system be restored, nor the funds of
to provide credit for the Government? the American people placed on deposit in the banks and
The interest rate of the Government on short-term loans enable the bankers to make loans to finance the transac-
increased from one eighth of 1 percent last December to tions of business and industl-y in this country.
4.26 percent last week. This means that the interest rate HOW THE GOVERNMENT CAN SAVE AT LEAST $700,000,000
of the Government has increased thirty-four times, or 3,400 ANNUALLY-AND MAKE BANKS SAFE
percent during a period of 3 months. Whenever insti- Mr. PATMAN. :Mr. Speaker, Thursday, March 9, Congress
tutions or individuals find their interest rates increasing at was convened in extraordinary session; it is the first session
such a proportion in such a short length of time, one of two of the Seventy-third Congress. The President submitted a
things is certain: either their credit is gone or their source b~ll. which was intended to assist in the opening of all the
of credit is gone. In plain English, the credit of the United banks in the Nation. Although it was contrary to many of
States has either J)een absorbed or else its source of credit the principles that I have advocated for many years, it con-
is gone. Anyone knows that this Government cannot now tained provisions I do not approve and failed to go far
collect enough taxes to meet its present expenses. When- enough in other ways, I yielded and voted for the bill; it
ever governments reach the position where they can neither was an emergency measure and should have been passed
collect enough .taxes to meet their expenses nor borrow immediately. The proposal embodied one feature that I
enough to meet their expenses, there is only one thing left have advocated for a long time, and that was the issuance
for them, and that is to print money. Such is the position of additional circulating medium. The banks of the Nation
of the United States; and, whether we like it or not, there have inflated credit out of proportion to the amount of actual
is going to be some inflation in order to meet the obligations money. The result is the banks have become indebted to
of the Government. The question is, Are we going to have their depositors to the extent of $45,000,000,0GO and have in
inflation tied to gold or not? .This bill will permit inflation their vaults less than $1,000,000,000 to pay it with. The new
tied to gold, and that will mean some control. There is law will cause the printing presses at the Bureau of Engrav-
nothing new about this bill. It is the Burtness bill which ing and Printing here in Washington to print more money
has been before Congress for 4 or 5 years. A people and furnish it to the banks. One day this week this Bureau
1933 . CONGRESSIONAL RECORD-HOUSE 83
printed and delivered more than $30,000,000, running both national debt. That would help balance the Budget; it
day and night. Similar sums · are now being printed and would take tax-exempt securities out of the way and cause
delivered daily. more income taxes to be paid to the Government and less
EXPANSION OF CURRENCY NECESSARY taxdodging by the big rich.
If the Republican Party had released itself from the OPPOSITION TO CONCENTRATION OF MONEY AND CREDIT CON-
clutches of Wall Street and expanded the currency imme- TROL IN THE HANDS OF A FEW GREAT INTERNATIONAL BANKING
diately after the stock-market crash in 1929 or within a year CONCERNS
after the crash, our people would have been saved from this Mr. LUNDEEN. Mr. Speaker, today the Chief Executive
awful money panic. Our President will doubtless ask sent to this House of Representatives a banking bill for
amendments to this new law when conditions are more nor- immediate enactment. The author of this bill seems to be
mal and when it is better understood. Under the new law unknown. No one has told us who drafted the bill. There
the money is issued to the banks in return for Government appears to be a printed copy at the Speaker's desk, but no
obligations, bills of exchange, drafts, notes, trade accept- printed copies are available for the House Members. The
ances, and banker's acceptances. The money will be worth bill has been driven through the House with cyclonic speed
100 cents on the dollar, because it is backed by the credit after 40 minutes' debate, 20 minutes for the minority and
of the Nation. It will represent a mortgage on all the homes 20 minutes for the majority.
and other property of all the people in the Nation. I have demanded a roll call, but have been unable to get
No GoLD coVERAGE the attention of the Chair. Others have done the same,
The money so issued will not have one penny of gold notably Congressman SINCLAIR, of North Dakota, and Con-
coverage behind it, because it is really not needed. We do gressman BILL LEMKE, of North Dakota, as well as some of
not need gold to back our internal currency. We only need our other Farmer-Labor Members. Fifteen men were stand-
gold to settle our balances with foreign countries. our ing, demanding a roll call, but that number is not sum-
people do not actually use gold as a medium of exchange; cient; we therefore have the spectacle of the great House
paper money is just as good and is much easier to handle. of Representatives of the United States of America passing,
However, if gold is desired as a backing for paper money, we after a 40-minute debate, a bill its Members never read and
have a sufficient amount to permit the issuance of $5,000,- never saw, a bill whose author is unknown. The great
000,000 more money and still have a gold reserve of 40 per- majority of the Members have been unable to get a minute's
cent. When England paid us approximately $100,000,000 in time to discuss this bill; we have been refused a roll call;
gold last December the Treasury should have taken that gold and we have been refused recognition by the Chair. I do
and issued $250,000,000 in paper money, using the gold as not mean to say that the Speaker of the House of Repre-
a sufficient coverage of 40 percent, and the money should sentatives intended to ignore us, but everything was in such
have been put into circulation by paying it to Government a turmoil and there was so much excitement that we simply
employees or other governmental debts. Instead, the gold were not recognized.
was delivered to the private banks and the Government I want to put myself on record against a procedure of
given credit for the amount. The banks used a part of it as this kind and against the use of such methods in passing
a base to issue considerable money, which they loaned to legislation affecting millions of lives and billions of dollars.
their customers, and the remainder, which was the most of It seems to me that under this bill thousands of small banks
it, was sold back to Engbnd by the bankers. will be crushed and wiped out of existence, and that money
DRIVE AGAJNST GoLD HoARDERs and credit control will be still further concentrated in the
The gold that is given up by the people in the present hands of those who now hold the power.
crisis should be delivered to the Government. It should be It is safe to say that in normal times, after careful study
used to issue additional money upon which the people will of .a printed copy and after careful debate and considera-
not have to pay interest while it is in circulation. tion, this bill would never have passed this House or any
PRESENT sATISFACTioN other House. Its passage could be accomplished only by
Those of us who have worked for 3 years trying to get rapid procedure, hurried and hectic debate, and a general
the currency expanded have the consolation of knowing rush for voting without roll call.
that our plan has been adopted. I do not believe that the I believe in the House of Representatives. I believe in the
expansion is being made in a manner that will permit the power that was given us by the people. I believe that Con-
most good. However, the same kind of money is being gress is the greatest and most powerful body in America,
issued that we have advocated should be issued. It is sound and I believe that the people have vested in Congress their
money, although not as well secured as the money we pro- ultimate and final power in every great, vital question, and
posed to issue. the Constitution bears me out in that.
DisTRIBUTioN oF NEw MONEY I am suspicious of this railroading of bills through our
Since our leaders hav·e endorsed the plan to issue more House of Representatives, and I refuse to vote for a measure
money, consideration shoUld be given to plans for its dis- unseen and unknown.
tribution that will best promote the general welfare. I want the RECORD to show that I was, and am, against
It could be paid to Federal employees. It could be used this bill and this method of procedure; and I believe no
to retire a part of the national debt and save a considerable good will come out of it for America. We must not abdicate
sum in interest each year. At the present time our entire our power to exercise judgment. We must not allow our-
national debt of $20,000,000,000 could be retired with new selves to be swept off our feet by hysteria, and we must not
money without placing too much money in circulation and let the power of the Executive paralyze our legislative ac-
the Government saved more than $700,000,000 annually. tion. If we do, it would be better for us 'o resign and go
sAvE $7oo,ooo,ooo ANNUALLY home-and save the people the salary they are paying us.
I look forward to that day when we shall read the bill
Instead of the banks being permitted to loan $45,000,000,- we are considering, and see the author of the bill stand
000 with a reserve of from one to three billion dollars to before the House and explain it; and then, after calm de-
back it up, they should be denied that privilege and a much liberation and sober judgment-after full and free debate-
greater money reserve required of them. Then, instead of
the banks having so little money to pay their depositors, I hope to see sane and sensible legislation passed which will
they could have 40 or 50 cents in actual money to back up lift America out of this panic and disaster into which we
were plunged by the World \Var .
.every dollar in deposits. We would then have safe banking,
and the Government would not owe a penny of national RULES OF THE HOUSE
debt. Further, our Government would be saved the $700,- Mr. POU. Mr. Speaker, I offer a resolution and ask for
000,000 that is now being paid annually as interest on the its immediate consideration.
 United States presidential
certificate of authority as authorized by
presidential proclamation 2039.
I do hereby declare that I accept the rule as banking institution during the ongoing and substantiated
national emergency. That I accept the suspending of all normal banking activities and elect to utilize
section 401 of the Federal Reserve act as amended by the 1933 Congress on March 9 referring to
subsection 18 paragraph 6 of the Federal Reserve act and section 4 of the March 1933 act and page 78
through 83 of the Cong. Rec. of the first session of the 73rd Congress standing as irrefutable evidence as
to what the law is!

the statutes at large of the united states of america from sixty-fifth congress. sess. i. ch. 106. 1917, p. 418.
50 u.s. code § 4305 - suspension of provisions relating…property transfers, vested
interests, enforcement and penalties…- credit money/money credits assignments…

"the alien property custodian and such other persons as the president may appoint shall have power to execute, acknowledge, and deliver any such
instrument or instruments as may be necessary or proper to evidence upon the record or otherwise such acquittance and discharge, and shall, in case of
payment to the' alien property custodian of any debt or obligation owed to an enemy or ally of enemy, deliver up any notes bonds, or other evidences of
indebtedness or obligation, or any security therefor in which such enemy or ally of enemy had any right or interest that may have come into the possession
of the alien property custodian, with like effect as if he or they, respectively, were duly appointed by the enemy or ally of enemy, creditor, or obligee. the
president shall issue to every person so appointed a certificate of the appointment and authority of such person, and such certificate shall be received in
evidence in all courts within the united states. whenever any such certificate of authority shall be offered to any, registrar, clerk, or other recording officer,
federal or otherwise, within the united states, such officer shall record the same in like manner as a power of attorney, and such record or a duly certified
copy thereof shall be received in evidence in all courts of the -united states or other courts within the united states…”

individuals should not be liable for damages for acting pursuant to a statute later declared invalid. "Citizens and public officials
have a right to accept the law as it is written until it is repealed or judicially condemned. They are not required to speculate
upon the validity of a statute or to act under it at their peril." Downs v. Jacobs, 272 A.2d 706, 707 (Del. 1970).

Proclamation 2039 – Declaring Bank Holiday

A Proclamation
Whereas there have been heavy and unwarranted withdrawals of gold and currency from
our banking institutions for the purpose of hoarding; and
Whereas continuous and increasingly extensive speculative activity abroad in foreign
exchange has resulted in severe drains on the Nation's stocks of gold; and
Whereas those conditions have created a national emergency; and
Whereas it is in the best interests of all bank depositors
1 that a period of respite be
provided with a view to preventing further hoarding of coin, bullion or currency or
speculation in foreign exchange and permitting the application of appropriate measures to
protect the interests of our people; and
Whereas it is provided in Section 5 (b) of the Act of October 6, 1917 (40 Stat. L. 411), as
amended, "That the President may investigate, regulate, or prohibit, under such rules and
regulations as he may prescribe, by means of licenses or otherwise, any transactions in
foreign exchange and the export, hoarding, melting, or earmarkings of gold or silver coin
or bullion or currency . . ."; and
Whereas it is provided in Section 16 of the said Act "That whoever shall willfully violate
any of the provisions of this Act or of any license, rule, or regulation issued thereunder,
and whoever shall willfully violate, neglect, or refuse to comply with any order of the
President issued in compliance with the provisions of this Act, shall, upon conviction, be
fined not more than $10,000, or, if a natural person, imprisoned for not more than ten
years, or both . . .";
Now, Therefore I, Franklin D. Roosevelt, President of the United States of America, in
view of such national emergency and by virtue of the authority vested in me by said Act
and in order to prevent the export, hoarding, or earmarking of gold or silver coin or
bullion or currency, do hereby proclaim, order, direct and declare that from Monday, the
Sixth day of March, to Thursday, the Ninth day of March, Nineteen Hundred and
Thirty-three, both dates inclusive, there shall be maintained and observed by all banking
institutions and all branches thereof located in the United States of America, including the
territories and insular possessions, a bank holiday, and that during said period all banking
transactions shall be suspended. During such holiday, excepting as hereinafter provided,
no such banking institution or branch shall pay out, export, earmark, or permit the
withdrawal or transfer in any manner or by any device whatsoever, of any gold or silver
coin or bullion or currency or take any other action which might facilitate the hoarding
thereof; nor shall any such banking institution or branch pay out deposits, make loans or
discounts, deal in foreign exchange, transfer credits from the United States to any place
abroad, or transact any other banking business whatsoever.

During such holiday, the Secretary of the Treasury, with the approval of the President
and under such regulations as he may prescribe, is authorized and empowered (a) to
permit any or all of such banking institutions to perform any or all of the usual banking
functions, (b) to direct, require or permit the issuance of clearing house certificates or
other evidences of claims against assets of banking institutions, and (c) to authorize and
direct the creation in such banking institutions of special trust accounts for the receipt of
new deposits which shall be subject to withdrawal on demand without any restriction or
limitation and shall be kept separately in cash or on deposit in Federal Reserve Banks or
invested in obligations of the United States.

As used in this order the term "banking institutions" shall include all Federal Re-
serve Banks, national banking associations, banks, trust companies, savings banks,
building and loan associations, credit unions, or other corporations, partnerships, as-
sociations or persons, engaged in the business of receiving deposits, making loans,
discounting business paper, or transacting any other form of banking business.

FRANKLIN D. ROOSEVELT emphasis added

Face
value